Spain’s central bank forecasts contraction of 1.5% this year

Spain's Central Bank expects contraction of 1.5% this year

Spain’s central bank on Monday forecast that the country, which is struggling to slash its deficit and debt, will fall back into recession this year with a contraction of 1.5 percent.

The Bank of Spain said however it expects Spain’s economy to make a modest rebound in 2013 with growth in gross domestic product (GDP) of 0.2 percent. It added that it estimates the economy to have grown by 0.7 percent in 2011.

“In 2011 the modest recovery which the Spanish economy began a year earlier weakened as the eurozone sovereign debt crisis extended to a greater number of countries and financial market tensions strengthened,” it said in a report. Source: Google.com

Europe not at risk of slipping into another recession.

Europe not at risk of entering recession again

Europe is not at risk of slipping into another recession and the euro region will attract new members rather than break up, the secretary general of the Organisation for Economic Cooperation and Development predicted yesterday.

“I think more countries will be joining the euro,” Angel Gurria said. “The euro and Europe will remain the largest trading bloc in the world for a long time to come.”

Efforts by European leaders to stop the spread of the region’s debt crisis by strengthening its EFSF rescue fund are also likely to succeed, he said. The size of the EFSF should be more than doubled to at least €1 trillion to provide a bigger safety net, he added.

The eurozone will not be able to collectively issue bonds any time soon: “It’s not going to happen,” he said. “To mutualise the risk it requires a much more important level of political integration, which is not there yet.”

Source: Independent.ie

Commercial property sales upturn in Spain and Tenerife

Commercial property sales improve in Tenerife and Spain

Opportunistic investors chasing cut-price prime commercial property in recession-hit Spain have helped push the sector’s total returns into positive territory for the first time in two years, a survey has found.

Investment Property Databank research showed commercial real estate total returns for 2010 hit 4.9 percent, from 2009′s negative return of 9.3 percent. It comprised a 1.2 percent fall in capital values and a 6.2 percent gain in income returns, IPD said late on Monday.

Retail property was the strongest performer, producing total returns of 7.7 percent in 2010, from minus 7.2 percent in 2009, with gains in both capital values and income returns. It was followed by offices at 1.9 percent and industrial at minus 0.6 percent.

In February, Reuters reported retail property investors were scouting around for distressed assets, betting that rising Spanish GDP would boost total returns by 2013.  

Source: Reuters/

Plenty of advice for Tenerife property hunters at Property Investor Show

Property bargains in Tenerife, Canary Isles and Spain

Lots of advice, plenty of opportunities and optimistic statements, but fewer exhibitors at the Property Investor Show, the UK’s premier event for property investors held last weekend at London Docklands Exel Exhibition centre.

However, there was plenty of essential information on “Where to” and “How to” invest provided from keen exhibitors just about managing to cope with the early rush of visitors with property investment on their minds. More than 30 seminars focused on topics ranging from “How to Spot a boom and a bust” to “How to win in a recession”.

Many small investors, were looking to acquire from the ongoing “Sale of the Decade” in the Spanish market, where banks are disposing of their unwanted toxic assets with huge discounts of up to 56% and generous mortgages between 80-111%.  A spokesman for a Spanish distressed property site  added: “Putting your money in the  Spanish property markets could be the perfect hedge for investors with sunny Spain for family holidays and some equity gain a few years down the line.”

Two properties can be bought for a realistic amount in Spain – one to rent out, the second for family enjoyment, with equity gains to look forward to when prices start to rise again in the world’s top second home destination.

Tenerife and the Canary Islands have some excellent bargains, even in the prime property sector, but prices will be rising again soon judging by the renewed interest of late.

Weak economic growth in Spain

Weak economic growth in Spain and Tenerife

Weak economic growth in Spain and Tenerife

Credit ratings agency Standard & Poor’s warned Spain that its weak economic growth prospects could undermine its plan to rein in its budget deficit, making a debt downgrade even more likely. Investors are increasingly worried about Spain’s budget deficit – and skeptical about the government’s ability to push through sharp cutbacks to right the situation.

The government has announced both tax rises and spending cuts – not all yet specified – to reduce its deficit back towards the 3 percent limit that euro rules prescribe.

In a statement, S&P said Spain’s deficit would likely remain above 5 percent of the country’s gross domestic product through to 2013 against the government forecast of 3 percent, and that as a result the debt burden could rise to above 80 percent of GDP by 2012.

S&P said it also expects much weaker economic growth than the Spanish government and that there was a “significant implementation risk” with regard to the current plan to reduce the deficit, which is estimated at 11.4 percent of GDP in 2009. Spain, which has still to get out of recession, is expected to grow by an average annual rate of 0.6 percent between 2010-13, according to S&P, way down on the Spanish government’s forecast of 1.5 percent.

S&P said it saw downside risks relating to the government’s revenue collection assumptions in particular, largely because Spain’s tax base is “highly sensitive” to domestic demand and has been sensitive to the real estate sector, which has collapsed over the last couple of years. “Neither of these sources is likely to be a strong contributor to revenue growth over the next several years,” S&P said.

S&P said it was maintaining its negative outlook on Spain’s double A+ rating, which it assigned in December, in the absence of “more aggressive and tangible actions” by the authorities to tackle Spain’s economic and fiscal problems.

“Any deterioration over and above our current expectations could put further downward pressure on the ratings,” S&P said.

Different idea in Spain to attract customers

Different ideas to attract custom

Different ideas to attract custom

A Spanish restaurateur, fearing a drop in business due to swine flu, is seeking to pull in customers by offering a sanitised — and hopefully virus-free — environment.

Miguel Angel de la Cruz, manager of the Mesa y Placer (Table and Pleasure) eatery in Madrid, said he was forced to act ahead of a feared ‘second wave’ of swine flu this northern autumn, which is “more dangerous to business than the economic crisis”.

“We are facing a very difficult autumn. We have therefore had to try and anticipate the impact of the H1N1 flu which has completely paralysed the sector in Mexico,” said de la Cruz.

So, instead of a free aperitif, his customers receive disinfectant hand gel and a sanitised napkin before reading menus that are covered in plastic to reduce the risk of contamination.

The meals are prepared by chefs wearing surgical face masks, and all staff must have their body temperatures checked before starting work to ensure they do not have the flu.

De la Cruz said another Madrid restaurant in the same group, Plato y Placer, in a more touristy district of the city, has introduced the same measures.

There, “the Japanese, who are very careful about hygiene, make up a large part of the clientele. They are coming less, but with these measures we hope they will return”, he said.

It was unclear how effective the antiseptically clean ambience would be in combating swine flu, which has killed at least 21 people in Spain since it arrived in Europe in April, nor whether they would attract custom.

Spain’s health ministry has not yet issued any advice for the restaurant sector, but recommends frequent handwashing and discarding tissues after using them, to combat the virus among the general public.

“An anti-tobacco law would save more lives than a dose of disinfectant gel, but it’s still better than nothing,” said Jose Carlos, a 43-year-old government worker as he ate lunch at Mesa y Placer with a colleague.

A visit to bars in the Plaza Santa Ana, one of the main tourist spots in Madrid’s old town, showed customers continue to use their fingers to eat tapas, tasty Spanish snacks, and drop their used tissues on the floor rather than throwing them away.

“We are not going to stop living or change our habits because of the flu,” said one, Marina, 42.

Hugo Vasquez, a manager of the Naturbier bar and restaurant, said establishments are waiting to “receive the information booklets from the health ministry, because there is a lot of uncertainty.”

He said “sales have not been too affected by the economic crisis because of tourists,” but said swine flu “scares us more than the recession as foreigners are likely to come less often”.